Much has been written and said about how to deal with homeowners in distress — owing more than they can afford for their homes, and often more than their homes are worth in the current market:
— Loan modifications have been an active initiative, but few have succeeded.
— Short sales remain a viable option in most cases, and major banks and the U.S. government have established a framework of rules and procedures to streamline this historically problematic process.
— Negotiating a deed in lieu of foreclosure can be a great solution for those that are running out of alternatives.
— Default and foreclosure are the finale.
This op-ed piece from RISMedia offers an attractive option that is worth exploring — equity sharing, true cooperation between lender and borrower:
Ultimately, all of the available alternatives require communication. Homeowners on the verge of losing their homes are understandably discouraged and humiliated, often angry, and to the point of simply closing off communication. I completely understand that mortgage servicers can be difficult to approach, and can be nonresponsive — in part because they have heard a lot of these requests and in part because their loss mitigation departments are often woefully understaffed. Nonetheless, persistence and a productive approach can help to salvage a very bad situation.
If you are in this situation, don’t hesitate to talk to a real estate professional about it, and ask about his or her experience and training in dealing with distressed property owners. Not only can you get helpful advice, but you may find that communication to your mortgage company by a less emotionally involved professional can get things done that you might not accomplish for yourself.